IBM sells semiconductor technology business

IBM has agreed to sell its global semiconductor technology business to Abu Dhabi-owned, California-based semiconductor specialist Globalfoundries and will pay $1.5bn to sweeten the deal for the loss-making unit.

IBM said the deal would allow it to focus on its core semiconductor and material science research business.

The tech giant will pay Globalfoundries over three years and will also absorb a $4.7bn pre-tax charge in its third quarter results, to be announced later on Monday, including asset impairment and costs of the sale.

As part of the deal, 'Big Blue' has agreed that for the next 10 years it will exclusively buy its server processors and semiconductor technology from Globalfoundries for 22, 14 and 10 nanometer semiconductors.

IBM had been hunting for a buyer for the unit since at least 2013, according to Bloomberg reports citing a person with knowledge of the unit.

"The agreement expands our longstanding collaboration, which began when Globalfoundries was created in 2009, and reflects our confidence in Globalfoundries' capability," said IBM director of research John Kelly.

"This acquisition enables IBM to focus on fundamental semiconductor and material science research, development capabilities and expertise in high-value systems, with Globalfoundries' leadership in advanced technology manufacturing at scale and commitment to delivering future semiconductor technologies."

IBM had advised over the weekend that it planned to make a "major business announcement", and brought its third-quarter earnings statement forward from its expected time later on Monday.

As of Wednesday afternoon, analysts expected the company to report operating earnings of $4.32 per share on revenue of $23.38 billion, according to Thomson Reuters.